WeWork and Uber cost SoftBank’s Vision Fund a quarterly loss of $8.9 billion Investing |
- WeWork and Uber cost SoftBank’s Vision Fund a quarterly loss of $8.9 billion
- RIP Consumer Marketplaces, 2011 - 2020 [long-post]
- New York Fed Adds $115.14 Billion in Short-Term Liquidity to Markets
- DIS beats on top and bottom line
- Why are REITs down?
- Juul halts sales of mint-flavored e-cigarette
- Dollar funding and liquidity squeezes big risks for 2020, says Amundi CIO
- I can't invest into a Roth IRA because I do not have "earned income" -my income is from business distributions and not employment income. What is my best alternative?
- Why is the performance of BABA so stagnant compared to AMZN?
- Drake gets into cannabis business with Canopy Growth partnership
- Why gov bonds ETF fall when rates had been cut?
- Robin Hood “infinite leverage glitch” closed
- Does TD Ameritrade charge interest when you write a naked call/put on margin account?
- Portfolio Performance from a "Guru" or BS? - Would You Invest In This?
- Vanguard Admiral Shares can only be purchased by registered financial advisors?? (IB)
- China - US rolling back tarrifs?
- Very interesting company- CK Life Sciences
- Fixed Income Securities Question
- Hold or sell AAPL?
- What are the most important aspects of stock investing a person should understand?
- What’s the deal with treasuries today?
| WeWork and Uber cost SoftBank’s Vision Fund a quarterly loss of $8.9 billion Posted: 07 Nov 2019 06:45 AM PST |
| RIP Consumer Marketplaces, 2011 - 2020 [long-post] Posted: 07 Nov 2019 08:44 AM PST I've worked in consumer marketplaces the last few years. I think the points below are now pretty widely accepted within the industry but thought it may be interesting to others so I did a quick write-up below. From about 2011 - 2018 there was rapid growth in marketplace businesses. Think food delivery (UberEats, Doordash, Postmates, Grubhub, etc), ride sharing (Uber, lyft), homes services (Thumbtack, taskrabbit) or grocery delivery (blue apron, instacart). More recently we've seen a surge in last mile transportation companies (Scoot, Lime, Skip, etc). Many of these apps are now on our phone screens and play a central role in our lives. The story with these companies went as follows: these are supply driven marketplaces, if you acquire supply then you'll win the customer. For food delivery, this means hiring a huge sales team to go sell to restaurants. For home services, this means massive digital marketing spend. For ride sharing, this means massive out of home marketing spend coupled with subsidized driver wages. In 2017, it cost Uber as much as $650 per new driver it brought on the platform. Venture capitalists were happy to bankroll this. The theory was that you could spend your way to a liquid marketplace. A liquid marketplace is one where you have enough supply on the platform for consumers to have options. Then so many consumers come to the platform because there are options that it causes more supply to come to the marketplace. This flywheel effect gets so strong that neither supply nor customers can leave the marketplace because they are both there. Investors thought that it would take $$$$ to reach liquidity but that once a marketplace reached liquidity it would be extremely hard to disrupt. At that point, the platform would have scale and could ramp down their customer and supply acquisition cost generating profit that would continue.... into infinity! Fast-forward to 2017/2018, many of these consumer marketplace companies are no longer new startups. They've reached massive scale and have grown faster than any consumer companies we've seen in the history of the world. However, these companies are still burning cash and need more money. Historically, they would have gone public at this point. But, would public markets be as patient as private investors? If you're a Doordash, you're still selling investors on the liquidity dream. You're growing so fast! You just need to keep spending to reach liquidity for a few more years. This means that you would continue to be massively unprofitable up until that point. Enter SoftBank Vision Fund. The SoftBank Vision Fund is a $100B fund founded in 2017. Yeah that's $100 BILLION. It was the largest private equity fund ever. About $45B came from the Saudis. Another $26B from SoftBank itself. The balance came from capital rich companies like Apple. SoftBank had so much money that it effectively replaced the public markets for these large consumer marketplaces. It was happy to drop another $550M into Doordash in 2018 as it continued to grow rapidly in a very unprofitable way. Chasing the liquidity dream. Instead of being forced to go public to get huge amounts of cash, these companies could raise hundreds of millions in Series Gs. Historically, most companies would go public after Series D. With every subsequent series of funding, Softbank increased the overall valuation of these businesses. This in turn moves the goal posts for how much scale a company has to hit in order to actually warrant that value. This brings us to the present day. Reaching a point where even Softbank can no longer satisfy their capital needs, some of these companies are going public. It turns out public investors are less patient... and we're not seeing the original marketplace theory play out. These companies aren't seeing the benefits of scale where at a certain liquidity level they can ramp down supply and customer acquisition costs and generate profit as the platform. Last week Grubhub's stock fell by 41%. In a shockingly candid shareholder letter, Grubhub basically said that they don't think anyone can generate profit in food delivery right now. They're not experiencing economies of scale running a delivery network, and neither supply nor the customer is proving to be loyal despite Grubhub's insanely massive scale. Uber and Lyft are similarly down almost 40% since IPOing. BlueApron IPOd at a $3B market cap and is now worth $111M. Before going public it cost BlueApron as much as $150 to acquire a new customer. 70% of these customers churned within 4.5 months. When BlueApron was venture-backed this spend was defensible because of the liquidity dream. When they went public, non-patient public investors just saw a massively unprofitable business. DoorDash, Postmates, Thumbtack, TaskRabbit, Bird, Scoot, Skip, Fair, and almost every other consumer marketplace business that is still private should be shaking in their boots. They have huge paper valuations based on the liquidity dream. Nobody in the public markets is reaching this liquidity dream. Customers and supply are not loyal to a given platform. If your platform tries to improve its economics (say by raising delivery rates or increasing rideshare costs) another private venture backed platform will undercut you and the supply and customers will leave you. What are the implications of this? I think we'll see the bigger marketplace companies try to cut their more egregious marketing costs to lower supply and customer acquisition. I think we'll also see prices go up on your food delivery, uber rides, plumber, etc. inherently leading to slowing or negative growth. Some of these companies will be acquired or go bankrupt. Investors are going to be much less inclined to invest in two-sided consumer marketplaces as the liquidity dream never really panned out. This will mean less innovation and new products in this space. But we'll see more one-sided marketplaces where the supply is owned by the company and automated. For example, rideshare from a company that owns a fleet of autonomous vehicles. Food delivery from a company that owns its own massive kitchens in major population centers (the uber founder is actually working on this). City owned last mile transport as a public good. Given the significant consumer value these businesses generated, I think we may also see massive companies bundle them into their business as a frequency play to get customers within their ecosystem. For example, Amazon owned grocery delivery as prime benefit to lock you in to overall ecosystem. Food delivery within a super app like Facebook also a marketing expense to lock you into their ecosystem, etc This also has big implications for the gig economy as gig workers have been effectively subsidized by investors the past decade and the reduction in growth above will also lead to a reduction in gigs. From a trading opportunity, I'd be short every consumer marketplace including Uber and Lyft at their already deflated values. [link] [comments]  |
| New York Fed Adds $115.14 Billion in Short-Term Liquidity to Markets Posted: 07 Nov 2019 03:05 PM PST |
| DIS beats on top and bottom line Posted: 07 Nov 2019 01:25 PM PST https://www.cnbc.com/2019/11/07/disney-dis-fiscal-q4-2019-earnings.html I'm long with great faith in Disney+ and Hulu being the first real Netflix competitors. [link] [comments]  |
| Posted: 07 Nov 2019 05:42 PM PST REET, XLRE, VNQ, BBRE, etc. are all down ~4% over the last 5 days. Is there something that happened that caused this? [link] [comments]  |
| Juul halts sales of mint-flavored e-cigarette Posted: 07 Nov 2019 01:30 PM PST https://www.theguardian.com/society/2019/nov/07/juul-mint-flavored-e-cigarette-halts-sale-teenagers
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| Dollar funding and liquidity squeezes big risks for 2020, says Amundi CIO Posted: 07 Nov 2019 09:34 PM PST |
| Posted: 08 Nov 2019 01:02 AM PST I'm 22 and have heard at a young age investing into the Roth IRA is the best move since it avoids taxes later in life. I would max out the 6k in my Roth IRA, however all my income comes from my internet business, and investing into the Roth/tradtional IRA with this sort of business income isn't supported because I technically dont have "earned income". I'm currently using Vanguard. Is there any type of 'IRA' for business owners I could invest my money under, or is my best bet just buying index funds and paying the tax on the gains when I sell them? Appreciate the input. [link] [comments]  |
| Why is the performance of BABA so stagnant compared to AMZN? Posted: 07 Nov 2019 08:32 PM PST Over the past 5 years: Let's look at these companies operating in a very similar industry: AMZN +500% BABA +65% Sinilar case in online dating, over the past 5 years: MTCH +400% MOMO +165% You would think that China is more untapped and with even greater growth potential, yet these shares have not taken off and performed relatively poorly. For such a big player at the cutting edge of its industry in a large, high-growth market BABA shares have been a poorly performing investment to date. Heck if you even stuck your money in something seemingly dull and stagnant like WD-40 or Clorox you would've still easily outperformed BABA. [link] [comments]  |
| Drake gets into cannabis business with Canopy Growth partnership Posted: 07 Nov 2019 05:47 AM PST |
| Why gov bonds ETF fall when rates had been cut? Posted: 08 Nov 2019 02:35 AM PST Hi, why governement ETF bonds price fall when US cut rates? I thought that this will make price of bonds rise and not fall. Could it be because of stocks rising too, so market now doesn't value bonds? Thank you [link] [comments]  |
| Robin Hood “infinite leverage glitch” closed Posted: 07 Nov 2019 10:41 AM PST |
| Does TD Ameritrade charge interest when you write a naked call/put on margin account? Posted: 07 Nov 2019 11:38 PM PST Can't seem to find an answer here, but would like to because TD Ameritrade's margin rate is ridiculously high (compared to IB). With a margin account, TD Ameritrade lets me write naked calls/puts in my margin account. I'm curious if I will get charged interest for doing this? The rationale being that I take out a "margin loan" to cover the option during its life time. Or will it just be a naked option without any cash covering it (ie. no margin involved) Really confused, hoping someone can clarify. [link] [comments]  |
| Portfolio Performance from a "Guru" or BS? - Would You Invest In This? Posted: 07 Nov 2019 11:21 PM PST Hey guys, I found an interesting investing very short term (3-4 day) trading strategy, which charges over $1000. They provide you stock picks, but I'm always weary about services like these. But since they offered a return guarantee in a month I thought I'd look at it. The only thing is that it doesn't provide guidance on any position sizing or ratios (not surprisingly). So I attempted to look under the hood by putting the historical trade info into Excel and made a few calculations. But the results came out to be... underwhelming to say the least. Calculated as if I invested $1,000 on every stock pick that was given. These picks range from mid 2018 to current. There were approximately 2 - 3 picks per month. Sorted from oldest (top) to newest trades. Calculation I'm not sure I did right:
In this scenario of investing $1,000 on each position, I would've come out at a loss (value at top right) if I followed every recommendation. Unless I'm missing something vital? Each and every pick sound amazing and backed with tons of actual research, but the results are so unpredictable. Hence the thought of equal positioning with extremely conservative stop losses, as you can see from small losses. Is there another general way to position trades? Or is this just garbage? Wasn't sure how else to show this so its on google drive. [link] [comments]  |
| Vanguard Admiral Shares can only be purchased by registered financial advisors?? (IB) Posted: 07 Nov 2019 01:22 PM PST So I just tried purchasing some Vanguard Admiral shares (VCADX) in my Interactive Brokers account. Turns out they don't allow this: "Trading is allowed for US registered financial advisors only". I spoke to a customer support rep and he confirmed this is indeed the case, their agreement with Vanguard does not permit their users to buy/sell Admiral shares in their brokerage accounts. He also said there was no work-around for this. Anyone know how common this is? Are all brokerages like this? (I assume if I open an account at Vanguard this would not be an issue?) [link] [comments]  |
| China - US rolling back tarrifs? Posted: 07 Nov 2019 05:22 AM PST |
| Very interesting company- CK Life Sciences Posted: 07 Nov 2019 10:05 PM PST Unfortunately it's only traded in hong kong and doesn't have an adr- highly speculative, but I wish I could open a position in this company. They have a potential vaccine for melanoma based on antigens which are injected in a person's body in early stage patients. [link] [comments]  |
| Fixed Income Securities Question Posted: 07 Nov 2019 09:45 PM PST Maybe I haven't been paying attention, but I haven't read any posts on /r/investing about fixed income securities. I haven't invested in one of these as I just discovered their existence. These securities appear to pay a regular return, at a lower risk. What are the downsides of a fixed income securities? One potential downside I've read is that the security can't be traded in online exchanges, but you can open an account online. Thank you! [link] [comments]  |
| Posted: 07 Nov 2019 08:55 PM PST Apple is on an absolute tear. I'd love to sell my measly 88 shares I bought back in 2007, but I can't bring myself to do it considering some price targets are around $280. Anyone else who owns Apple considering selling? Why or why not? [link] [comments]  |
| What are the most important aspects of stock investing a person should understand? Posted: 07 Nov 2019 08:06 PM PST |
| What’s the deal with treasuries today? Posted: 07 Nov 2019 10:13 AM PST |
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